Sell Your Colorado House

Are you looking for Colorado Springs houses? If so, you have come to the right place. Colorado Springs is a great place to set up home and start a life. If you are planning to look at houses in the area, however, it is important that you know exactly what you are looking for. Having a checklist handy when you search through houses will help you keep track of the advantages and drawbacks of each home. Let’s take a look at some things that you may want to include in your checklist.

When looking at houses in Colorado Springs, one of the first places you will want to look is in the exterior of the house. Preferences will vary when it comes to the outside of a home. Families with children or dogs, for example, may require a large, fenced in yard. Others, on the other hand, may not worry so much about the size of the yard. Regardless of your preferences, it is important to note what each house has to offer. When recording information about your houses, be sure to note the size of the lot, the condition of the landscaping, and whether or not the yard is fenced in.

When looking at the outside of a house in Colorado Springs it is also important to note the condition of the siding, as well as the condition and age of the roof. Roofs can cost a lot of money to fix, so you want to ensure that you will not have to replace one when you purchase your new home. Also, be sure to check if there are any cracks or holes in the foundation of the home. Finally, record whether the home has a garage, as well as how many cars the garage will hold.

When it comes to the inside of the home, be sure to take note of the size of each room. Check all windows and doors to ensure that they open and close without any hassle. When you get to the kitchen, be sure to ask if any of the appliances are included and, if they are, note what condition they are in. When it comes to the bedrooms, check how much closet space is available and note which type of flooring is used. In the bathrooms, be sure to check that everything is working well. Run the facets and flush the toilets to make sure that they are working properly and that there is good water pressure.

If there is a basement, be sure to make note of whether it is a partial or full basement and whether it is finished or unfinished. Always be sure to ask about different utilities of the home such as water service, plumbing, heating, insulation, and electrical.

The above are just a general guideline to help you take notes when looking at homes. Other things you may want to record include the price of the home, the location of the home, the property taxes, the terms of the mortgage, and, of course, whether or not you could picture yourself living there.

Making checklists as you search through homes may not seem necessary, but they will definitely help you when it comes down to picking between several great homes. Begin searching for Colorado Springs houses area today and find a house that you can make a home.

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While the economy has created a ‘buyers’ real estate market with home values plummeting and Colorado Springs foreclosures soaring, who’s buying up the properties that are for sale?  While first time home buyers are on the decline and previous buyers are being turned down because of tight credit conditions, Pink Realty agents are seeing that those with cash are the ones bringing the deals to the table.  And today, it’s typically the investors that have the cash!  Per Lawrence Yun, Chief Economist for the National Associate of Realtors (NAR), “Increases in all-cash transactions, the investor market share and distressed home sales all go hand-in-hand.  With tight credit standards, it’s not surprising to see so much activity where cash is king and investors are taking advantage of conditions to purchase undervalued homes.”

On February 23, 2011, Jon Prior of the NAR summarized the housing sales for January 2011.  All-cash sales increased to 32% of all sales in January, which was up from 29% in December 2010.  Additionally, it was investors that grabbed more of the market share by accounting for 23% of all buyers in January, up from 20% in December 2010 and up 17% from one year ago.

While many investor home purchases will result in a traditional fix and flip sale, the current rental market and trends are also providing a great profit opportunity for investors.  The demand for rentals in Colorado Springs is on the rise because more people are being turned down for home loans and more people are being displaced because of foreclosure or selling their home on a short sale.  Colorado Springs has become a hot rental area because of the number of military personnel in the city, but also because the economy and housing market has caused so many homeowners to lose their homes to foreclosure or because they had to sell their home as a short sale.  All these people are in need of housing and looking for rentals.  This demand has resulted in less than 1% vacancy in Colorado Springs.  Traditionally in Colorado Springs, the 3 bedroom home was always the highest in demand and considered the ’sweet spot’ in the rental market.  The 3 bedroom homes were always rented, never vacant and there were never enough of them to meet the demand for them.  The larger homes that were for rent were not in demand and stayed vacant.
However, today the demand for 4 and 5 bedrooms homes is increasing.  As more and more middle class families are displaced, the need for the larger rentals increases.  These larger rentals also bring a nice price point to the balance sheet.  The current rental rate for a 3 bedroom single family home is $1140 per month and the 4 and 5 bedrooms are $1374 and $1789 respectively.

Call Pink Realty today at 719-393-7465 (Pink) to talk to an agent and see what great deal is out there waiting for you!

There is no doubt the opportunity for investors to ’snag the keepers’ is now.

While wholesaling and fix and flips bring fast and big profits, more investors are adding the right ‘keepers’ to their portfolio mix as rentals for additional long-term passive income.  With the market trend shifting toward larger rentals, investors should also note that the larger homes with higher mortgages tend to get discounted more by the lenders when working a short sale.  Many of these higher end homes are simply in need of paint and carpet.  We have seen nice homes in the Stetson Hills area that needed as little as paint, carpet and linoleum flooring, but the homeowners couldn’t sell to a retail buyer because the buyers wanted a completely fixed home.  Investors can buy homes for sale Colorado Springs for around $125K and get them turned into great rentals for about $10K.  Cash flow on these short sales or bank owned properties would be very high.

If you call a Pink Realty agent, we would be happy to scour the market for you and find you a great property that will meet your needs.

Are you an investor who wants the upside of an investment property and today’s really cheap prices and huge cash flows but don’t want to at it alone?

The owners of Pink Realty are active, experienced investors and are always looking for partners on deals.  Just give is a call at 719-393-7465 (Pink) and ask to talk to Russ or Monica about partnering on deals.  We would be happy to talk to you.  Just tell us what you want to bring to the table and we will see how we can work together.

•    Do you qualify for the loan to buy the house?  A common strategy investors are using now is to buy houses with cash, remodel the houses and then refinance the property with zero money out of pocket.  We have investor friendly lenders ready to do these types of loans.

•    Maybe you have a small amount of cash available and we can short a 2nd loan and bring the 1st mortgage current on a good property.

•    Maybe you have a larger amount of cash available making 1% at the bank or in an IRA and you want to do something more productive with it but don’t know exactly how.  We can find a really cheap house that we can buy, fix up, and rent.

A short sale is when a lender agrees to allow a mortgaged property to be sold for less than what is owed on the mortgage.  While lenders don’t like their mortgages ’shorted’, they do understand the benefits.  Lenders know the loss incurred from a short sale is far less than the loss they will incur if they allow the property to go into foreclosure.  Foreclosure is very expensive process for lenders as it not only incurs expensive legal fees, but also adds the expenses of maintenance, advertising and selling, insuring the home and paying property taxes.  Lenders are not in the real estate business, they are in the business of making loans, so they know that selling a property as a short sale definitely has its financial advantages.

Today, everyone knows the real estate market is depressed.  The majority of Colorado Springs homes are distressed properties that are either advertised as a short sale or a foreclosed home.  Property values across the country have fallen and lenders have tightened their credit requirements.  The market has increased the competition between selling a home as a short sale and selling a home at a retail price.  While this market causes distress for sellers, it creates prime opportunities for Pink Realty agents home buyers to find great discounted deals on properties for their clients.

The current Colorado Springs real estate market also allows home buyers to seriously scrutinize the price of retail homes.  They aren’t willing to pay retail price for a home unless it is in perfect condition as there may be several other similar homes in the same neighborhood selling at a steeply discounted price.  This increases the competition between the short sale and retail properties for sale, however many buyers want to shy away from short sale properties because of some negative stories they may have heard.  We won’t sugarcoat the short sale process for you.  It can take time and be frustrating, however, if you work with a Pink Realty agent who is experienced and knows and understands the short sale process, it helps.  A real estate agent who has a good success record for getting deals done (and the Pink Realty team has closed hundreds of short sales) can make the short sale process appear seamless.

With that said, there are many advantages for buying a home as a short sale.  If you are aware that the process can take longer than a retail sale, you can be prepared and plan ahead.  Below are the 10 top advantages for purchasing a home as a short sale:

1.  With so many distressed properties on the market, you have a huge inventory of homes in a wide variety of neighborhoods to choose from.

2.  Unlike foreclosed or REO homes, you have the opportunity to talk to the seller of seller’s agent about short sale homes and to find out more information about the home.  This allows you to determine what, if any, repairs may be required.  In many cases, the repairs needed for a short sale property are far less than those needed for an REO property.

3.  You can obtain a home for a substantial discount which saves you thousands of dollars and offers you great future equity.

4.  Since the seller is trying to avoid foreclosure, they are cooperative and play an active role in the short sale process, which moves the process along faster.

5.  Because the homeowners are involved, they generally see the process through to the end.  As a result, they tend to keep the properties in better condition than a home that has been foreclosed on.

6.  When you work with a Pink Realty agent that understands short sales and works with an experienced short sale negotiation team, the short sale process is streamlined and takes less time.  Oftentimes, homebuyers work with a real estate agent that is experienced in the retail market, not the short sale market.  If a homebuyer wants to put an offer on a short sale property, but is working with a real estate agent that is not familiar with short sales and the process, it can end up being a nightmare for the buyer.

7.  Another way to minimize the time a short sale takes is to search for short sale properties secured by a FHA loan.  The FHA pre-foreclosure sale program requires that the lender provide the minimum sales price and the minimum net they will allow.  Therefore, you know what offer must be made and it shortens the short sale process tremendously as the ‘price haggling’ part of the process is eliminated.

8.  Additionally, if you purchase the home as a qualifying FHA buyer, meaning you are receiving a FHA loan to buy the property, the short sale lender agrees to pay 1% of your closing costs saving you additional money.

9.  If you are pre-qualified for a home loan from your lender or intend to purchase the property as a ‘cash’ deal, the short sale process also moves along faster.

10.  Buying a short sale property also helps stabilize the market and improve the condition of the neighborhood you are buying in because it keeps one more property from being foreclosed.  Foreclosed properties lower the value of neighboring homes more because they are vacant, less maintained and increase the risk of crime and vandalism to the vacant homes.

Pink Realty is known for its talented and experienced short sale agents.  Our real estate agents know the Colorado Springs foreclosures and they know and understand the short sale process.  Additionally, we work directly with an experienced short sale staff that has a known tract record for successfully negotiating short sale deals.  If you are a home buyer in the market to purchase a home, contact Pink Realty at 719-393-7465 (Pink).  Our agents will help you find the home you are looking for.

Getting a mortgage is one of the most complicated steps in buying a homes for sale Colorado Springs or anywhere.  Will I qualify for a home loan?  What do I need to get pre-approved?  What type of mortgage can I qualify for – FHA, VA, conventional, an ARM, fixed rate, …?  What is the best type of mortgage to get for my situation?  Should I go to my bank or find a Mortgage Broker?  Learning more about what you should know is important.  Preparing yourself and doing your homework will take some of the stress away and speed up the closing process for you once you’ve made an offer on a house.

In other Pink Realty blogs and articles we gave you a lot of information about credit score requirements and how you can best raise your credit score to meet the minimum requirements for conventional, FHA and VA loans.  Referring back to some of this information or even calling Pink Realty at 719-393-7465 (Pink) and asking to speak to our in-house lender will let you know what to expect with your credit and what work you might have to do to qualify.  If you think your credit may need some improvement, our lender will help you and will work with you for however long it takes and at no cost to you to build your score and get you qualified.

Lenders can either pre-qualify or pre-approve you.  What’s the difference?  Getting pre-approved or pre-qualified helps you know how much of a mortgage you can afford, but there is a big difference between being pre-qualified and being pre-approved.  While these terms are used pretty loosely in the industry, generally when a lender pre-qualifies you, they run a credit check and base their determination on information you provide them about your work history , income, and available down payment either verbally or maybe with documentation but possibly not complete documentation for their underwriting.  The bottom line is that a pre-qualification is largely based on what you tell them. It is possible that the pre-qualification results can mislead you on how much of a mortgage you can really afford.

When you get pre-approved, lenders check your credit report and verify all documentation similar to if they were submitting the application to their underwriting department.  This essentially makes the only unknown in the transaction the property.

When you are ready to get pre-approved for a mortgage, be sure to call Pink Realty at 719-396-7465 (Pink) and as to speak to our lender.  She would be happy to give you a good faith estimate of what she can do for you and earn your business.

If you are getting pre-approved before you begin house shopping, consider locking in your rate for a period of time, especially if the rates have been increasing.  Once you have your pre-approval letter, it shows real estate agents and sellers that you are serious about buying a house and you know what price range you can afford.  This not only helps your Pink Realty agent narrow their search for a home into your price range, it also can motivate sellers.

Additionally, once you are pre-approved, don’t do anything that will affect your credit score.  Don’t incur new debt (this includes incurring more debt on credit cards), don’t pay off debt, cancel any accounts, transfer any credit card balances and don’t change jobs!  Your lender will pull your credit again before you close and you don’t want you credit to have changed or you could lose your approval!

Once you have chosen a lender and are ready to begin the mortgage process there is a lot of paperwork that needs to be processed.  You will be required to provide copies of specific financial information.  So when you are ready to begin looking for a house and a mortgage, you can start preparing by rounding up the items you will need.  The following is a list of the information and documents you will have to provide your mortgage lender if you want to get approved for a mortgage loan:

Information about your employment and your income:

1.  Where do you work, how long have you been at your job, and what is your income?

2.  Are you a 1099 contract paid worker, paid on commission only, or do you receive a steady hourly wage or regular salary?

3.  You will have to show proof of your income.  This will include providing tax returns, 1099 statements, paystubs, etc.

4.  If you receive disability pay or social security income, you will have to provide statements.

5.  Depending on how you receive your income, a steady salary with paystubs or irregular income as a 1099 contractor, your interest rate could be higher.  A steady paycheck is generally deemed less risky than pay on commission only or as a contractor.

What are your outstanding debts?

1.  You will have to provide information about your recurring debts whether they are for a car loan, a student loan, or credit cards.  When the lender runs your credit report these accounts will show on your record, so be honest!

2.  The total amount of your recurring debt will be analyzed against your monthly pre-taxed income and a debt-to-income ratio will be calculated.

How much do you have in cash reserves?

1.  How much is your down payment and do you have enough cash to make this down payment and cover the required closing costs?

2.  Is the money you are using to make the down payment your own money or is it borrowed funds or a gift?

3.  You will have to provide the lender with copies of bank statements to show you have enough money to cover these costs.  If you are receiving a gift for your down payment from a family member, a friend or a non-profit agency, you will have to provide a gift letter to the lender.

4.  Lenders need to know if your cash reserves will be completely depleted after you pay your down payment and closing costs because they want to know you will have enough money left in the bank to cover a couple of mortgage payments in case something happens!

What works in your favor?

The following is a list of things that will definitely benefit you when you are applying for a mortgage:

1.  Being employed by the same employer for two or at least being employed in the same line of work for that period of time or longer.

2.  Having minimal debt and no recent large purchases, such as an automobile.  If your debt-to-income ratio is 36% or less, you are in pretty good shape!  You can call Pink Realty, and our lender can help you evaluate your debt ratios.  Call 719-393-7465 (Pink).

3.  If you can afford to put at least 5% of the sales price down with your own funds.  If you qualify for an FHA loan, you may only have to put as little as 3.5% down, or if you are a VA buyer, you may not have to put down anything, but the more you can put down, the better.  If you are trying to qualify for a conventional loan, you can qualify for as little as 5% down, but you will have to pay private mortgage insurance which can be expensive and is added to your monthly payment.

4.  Having enough cash reserves left in the bank to cover two mortgage payments after you have paid your down payment and closing costs.

Things that can make it more difficult to obtain a home loan?

1.  If you are self employed, a contract worker, work on commission only, or have irregular income.  You may be considered a higher risk if your income isn’t steady, based only on commissions or if you are paid as a 1099 contract worker.  If you are self-employed and have tax returns that solidly substantiate your income your risk can be reduced, but in addition to tax returns, you will also have to show profit and loss statements for your business.

2.  If you have a lot of recurring debt or a high amount of debt and your debt-to-income ratio is higher than 36%, you may run into issues or be charged a higher interest rate.

3.  If the cash reserves you have will be completely depleted after you have made your down payment and paid for closing costs, the lender can consider you a higher risk because if you lose your job or get injured and can’t work for a period of time, there is a risk you may not be able to make your mortgage payment.

4.  If you are receiving gift funds for your down payment because you have no funds of your own to purchase the home, you can also be considered a higher risk and may be charged a higher interest rate.

Before Getting a Mortgage, consider the following:

1.  Know what your budget is so you know what size mortgage you can really afford.  You can be given a pre-qualifying mortgage amount by a lender based on your income, but you also have to take your monthly recurring debts into consideration, along with unexpected expenses such as medical bills..

2.  Depending on your cash situation, you need to know if it is more important to offset a higher rate with lower closing costs or a lower rate with higher closing costs.  When you are shopping for mortgage quotes, don’t just look for the lowest interest rate.  You also want to compare the terms and conditions.  There is a lot of competition out there today, so be sure to ask your lender for any special incentives.  Lenders may be willing to waive some fees to attract your business!

When shopping for a mortgage quote, be sure to ask the following questions?

1.  What will my monthly payments be?

2.  Are there any pre-payment penalties?

3.  Are the terms fixed or variable?  If the interest rate is variable, what is the interest rate cap?  In other words, what’s the highest my interest rate can go and what will the payments be at this rate?

4.  Do I have to pay any loan origination fees?

5.  Do I have to pay any discount fees for this interest rate?

6.  Are there any lender incentives?  In other words, will the lender pay any of the closing costs or waive any fees?

7.  Will I have to pay private mortgage insurance?

What not to do after you have been approved!

After you have been approved for a mortgage and have received your pre-approval letter from your lender, do not do any of the following or you can jeopardize your approval:

1.  Don’t apply for new credit as the inquiries will change your credit score.

2.  Make sure you pay all your recurring debt payments on time.

3.  Don’t pay off collections or charge off accounts unless specifically told to do so by your lender.

4.  Don’t charge more on your credit cards and don’t close any credit card accounts or transfer any credit card balances.
5.  Don’t make any large cash purchases as this may decrease your verifiable bank balances.

6.  Don’t quite your job.

7.  Don’t change your job without first consulting your loan officer.

8. Don’t bounce any checks.

Do your homework and become an educated consumer!  Knowledge is power and knowing what’s required to get a mortgage, how to determine the amount of mortgage you can safely afford, and how to shop and negotiate for the best mortgage for your situation will benefit you tremendously.  If you have any questions or want help, Pink Realty is here to help you.  Give us a call at 719-393-7465 (Pink).  Our loan officer will be happy to help you with a loan, and then a Pink Realty can help you find your dream Colorado Springs house!  We want to help you through the whole process and feel all the rewards of homeownership!  Give us a call today.  We are here to help you!

In today’s economy, it’s becoming more and more difficult to get your bills paid on time. After a few late payments, you may wonder what the impact is on your credit report and your credit score. Whether you have lost a job, gone through divorce, lost a spouse, or dealt with a serious medical issue, you know that any hardship can wreak havoc on your financial responsibilities. You are not alone, and we at Pink Realty help people who have dealt with these all the time. More than 43 million people in the United States have credit issues that are severe enough to make obtaining credit with reasonable terms very difficult. If you want to repair your credit and improve your score so that you can buy a home, there are some things that you should understand.

Understanding your credit report and your credit score is very important when you want to get credit. There is different credit scoring models used today depending on what type of credit you are applying for. The important thing to understand about these scoring models is that regardless of what type of credit you are applying for, the human element to judge character and creditworthiness is removed from the transaction. Mortgage credit scores typically range between 350 - 800. If you are looking to buy a car, auto credit scores range between 250 - 900. If you are looking to purchase household furniture or other goods, a consumer credit score is between 300 - 900.

In the finance world, especially the mortgage industry, a lot of Federal regulation has been implemented that has caused the banks to severely tighten their credit standards and the regulations in 2011 are just as tight as they were last year. The economy, with its high unemployment rates and increased cost of living has made it virtually impossible for the average person to maintain perfect credit. The sum of this equation has about 40% of the people who are trying to qualify for a new home loan are being denied for a mortgage.

These days in Colorado Springs, the agents at Pink Realty see that about 2/3 of the real estate listings are either short sales or REOs and 40% of the people trying to buy a home, can’t qualify. Are you one of the 40% that wants to buy a Colorado Springs Houses but you can’t because your credit score isn’t high enough? What can you do about it? We’re going to take a look at what the credit score requirements are for the different types of home loans and then we’re going to address some important credit report facts so you can create your own credit report action items that will help you succeed in getting that mortgage for your dream home.

Most lenders today require a minimum credit score of 640 to get approved for a mortgage loan. What this means is that out of the 3 credit bureaus, your middle score must equal or exceed 640. While some lenders may deviate from this standard rule, they don’t without a cost. You may have to pay a higher interest rate, come up with a larger down payment and they may require that you have enough reserves in the bank to cover several mortgage payments. So, while banks may advertise that they lend on lower scores, beware of what it will cost you. Additionally, banks don’t want to lend credit to those with a lower score than 640 because it is harder for them to sell the loan to another bank, and they only want to make loans that are marketable.

If you are applying for a conventional mortgage, your credit is most likely in good standing. Conventional loans are typically for borrowers that have a sizeable down payment and a good credit score. While many lenders issuing conventional loans require a credit score of 660, ideally they look for scores of 720 or higher. Additionally, they look for a minimum down payment of at least 5% of the sales price. Most conventional loans are underwritten by Fannie Mae and Freddie Mac, so the higher your credit score, the more favorable credit terms you will get. In today’s market, you don’t see too many conventional loans being issued, especially without private mortgage insurance. If your credit score meets the requirements and you have a down payment of 20% of the purchase price, you can obtain a conventional loan without private mortgage insurance.

If you’ve had a few dings on your credit report and you know your score doesn’t top the chart, you can apply for an FHA insured loan. While FHA doesn’t issue loans, they insure them, and their credit requirements are not as stringent. However, the lenders who are granting FHA loans may impose their own credit standards in order to better protect themselves from losses and to be able to better sell the mortgages on the secondary market. In the fall of 2010, HUD established some new credit score requirements. Borrowers with credit scores of 580 or higher were eligible for maximum financing (96.5%). Borrowers with credit scores between 500 - 579 were eligible for 90% financing and borrowers with scores below 500 were not eligible.

The VA guarantees loans to veterans and active military personnel. Lenders that issue VA loans will provide 100% financing and look for credit scores of 620 or higher.

OK, so what do you need to do to get your credit score up so you can qualify for your dream home? The first thing to do is get a copy of your credit report. You can get a free copy of your credit report from each of the 3 credit bureaus annually, however if you want your FICO score, you generally have to pay a fee. You can also ask a lender to pull your credit as well, and they can give you your FICO scores for free, but keep in mind that that credit inquiry will have an impact on your score.

We’re going to take a look at what components makes up your score and give you some tips on how you can raise your score in the fastest amount of time.

Below is a chart that defines the 5 components that comprise your FICO scores (credit score). 35% of your total score is determined by past delinquencies, 30% by your revolving credit-to-debt ratio, 15% on the average credit age, 10% based on credit mix, and 10% on credit inquiries.

Past delinquencies weigh the most heavily on your total score, which probably makes you think you should pay off all past delinquent accounts. This is not necessarily so. Depending on the age of older past due delinquent accounts, it isn’t always best to pay them off. Bad debts can only stay on your credit report a maximum of 7 years from the date of last activity. If you pay them off, the account will show paid, but the derogatory status remains and the account will now stay on your report for a maximum of 7 years from the date you paid it off. Therefore, check the dates on older past due accounts, charge-offs or collections. If the accounts are from several years ago, they will fall off your report on their own soon enough. Remember, the maximum amount of time information can remain on your report is 7 years. It doesn’t mean they will stay on there for 7 years. If you have extra money and you want to use it to better your credit score, you can pay off some recent charge-offs or collection accounts. While the derogatory status will stay, the account will show paid. Once older past due accounts drop off your report, your score will automatically improve.

The next big bang on your credit report is your revolving credit debt ratio. There are a lot of myths about credit cards and how they impact your credit score. Some people think you should only have a couple of credit cards, others think you should combine all credit cards balances into one credit card balance. Some people don’t think you should have high credit limits and some people think if you have a lot of credit cards, but don’t use them, you should cancel them. Finally, some people think if you pay off your credit card every month, you won’t establish credit. All of these are myths. The longer you have had a revolving account in good standing, the better impact it makes on your score. Remember average age of a credit file is 15% of your credit score. Keep those old accounts open! If you have one or more credit cards with high credit limits and manage them wisely, high credit limits can actually be advantageous. If you have several different types of credit cards, including department stores, keep them open.
Closing credit card accounts can actually lower your score. But be aware, lenders have started cancelling inactive accounts or lowering credit limits on inactive credit card accounts. 30% of your credit score is determined by your debt-to-credit ratio. The lower your ratio, the better! Therefore, if you have cards that have a high credit limit, but you use the cards conservatively and keep small balances, it improves your score. The rule of thumb is to keep credit card balances less than 30% of the credit limit. For example, if you have a credit card with a $1000 credit limit, you want to keep the balance on that account less than $300. The more credit cards you have with a limit and the smaller the balance you keep on those cards, the lower your debt-to-credit ratio is. If you have ‘maxed’ out your credit cards and your debt-to-credit ratio is 95 - 10%, the best way to improve your credit score is to work hard to get the balances down below 30% of the limit.

The older your credit history is the better. The longer you keep and maintain accounts in good standing, the more positively it impacts your score. If you have a credit card account that has been opened for 10 years, don’t stop using the card or the issuer might decide to close the account or stop reporting to the credit bureau. While the information might still be available, it won’t add as much weight to your score. So keep older card accounts active even if it means charging a recurring monthly bill to the account and then paying it off each of month.

While the mix of credit you have on your file only makes up 10% of your total score, it is important for lenders to see how you handle different types of credit. If you are trying to build new credit, one of the best ways is to take out an installment loan. This might be for a car or household goods. Showing that you can make regular monthly payments over time is very important.

Finally we get to inquiries, which also make up 10% of your score. There are two types of inquiries: Hard inquiries and soft inquiries. If you are requesting your own annual credit report or applying for a job and your potential employer is pulling your report, these are soft inquiries and do not impact your score, however, hard inquiries do.
If you are shopping for a new car and go to 3 or 4 different car dealerships and each one runs a report, it will impact your credit score. However, the credit bureau system detects the similarities in reports pulled and the 3 or 4 reports will count as only one inquiry. The same happens if you are shopping for a home loan. If 3 different mortgage lenders run your report, it will count as one inquiry. Where inquiries really begin to hurt your score is when you apply for various types of credit in a short period of time. If you are trying to apply for credit cards and buy a car and a house at the same time, the inquiries will not only lower your score, but raise a red flag for lenders!

In summary, we mentioned the following points that can help improve your credit score:

• If you have old past due accounts, leave them alone. Let them age and fall off your report on their own.

• If you do have past due or delinquent accounts that are current, you can pay them off. The derogatory information remains, but the status changes to paid. While this does not impact your score, it is beneficial.

• Pay down your credit cards. Lenders like to see a big gap between your balance and your credit limit. While it makes sense financially to pay down high interest cards first, if you are looking to raise your credit score, it is best to pay down the cards that are closest to their limit! Work to keep a low debt-to-credit ratio on all of your revolving credit card accounts. Keep long standing accounts active, keep high balance accounts open, but use your cards conservatively so your debt-to-credit ratio stays low. If you have high balances on your credit card accounts, you will be most rewarded by paying the balances down until they are less than 30% of the credit limit. This is where you will get the biggest bang for your buck.

There are a few other things you can do to improve your score.

• If you have accounts that are old and due to fall off your report soon, you can contact the credit bureau to dispute the account. If it is old and has a small balance, there is a good chance the collection agency won’t dispute the charge and it will be removed.

• Look for errors on your credit report. If you see accounts that are not yours, dispute them. 70% of the credit reports have errors on them. The chances of there being an error on your report are good. So review your report and if there are errors, dispute them to have them removed.

• Old, past due accounts don’t get discarded because you have new, current accounts. Sometimes time is required to raise your score. Let old bad debts just fall off when they’ve aged. To mess with them will add 7 more years of derogatory information.

• There are a few other things you can do to increase the improvement. If you have accounts that are old and due to fall off your report soon, you can contact the credit bureau to dispute the account. If it is old and has a small balance, there is a good chance the collection agency won’t want to dispute the charge and it will be removed.
Other things to consider:

Your credit score is based on the information in your credit report, so check for errors. Some of these errors can really hurt you, so review your credit report thoroughly and look for any errors in the following areas:

• Correct any late payments, charge-offs, collections or other negative items on your report that are not yours.

• Correct any credit limits that are incorrect. If your credit card company has reported a credit limit lower than what it actually is, get it fixed.
• Correct any accounts that may be listed as “settled,” “paid derogatory,” “paid charge-off” if you paid them on time and in full.

• Correct any accounts that are still listed as unpaid that were included in a bankruptcy.

• Negative items older than seven years (10 in the case of bankruptcy) that should have automatically fallen off your reports.

• If you’ve closed accounts and they still show open, don’t correct this. Closing accounts can actually lower your score.

• If you are trying to establish credit because you have not credit, apply for a credit card. Charge something small each month, such as a tank of gas or dinner, and pay it off each month. After establishing some credit with a credit card company, apply for an installment loan. It can be a simple personal loan that you can pay off in 12 months. You want to do this to build a mix into your credit file.

Avoid these common credit mistakes when you are trying to improve your credit scores:

• Don’t ask a credit to lower your credit limit because it reduces the gap between your balances and your available credit. The lower the gap, the more it hurts your scores.

• Avoid making late payments. While a missed or late payment will do more damage to a good credit score than it will an already low score, you definitely want to avoid missed or late payments if you are trying to improve your score.

• If you are trying to improve your scores, applying for a new account or additional credit when you already have enough credit can ding your scores, unless you are recovering from a bankruptcy. In this case, applying for an installment loan can help.

• Don’t transfer credit card balances from a high-limit card to a lower-limit one or transfer small balances to a high limit card. It’s better to have smaller balances on a few cards than a big balance on one. Remember the debt-to-credit ratio.

Having good credit and being an educated consumer can save you money. You will get better interest rates and better terms, which saves a lot of money in the long run. Additionally, you can save money on insurance. Know what is in your credit report and know what your score is. Lenders are in business to make money. If you don’t know what’s in your credit report or what your score is, a lender can charge you more. Understanding what’s in your credit report and knowing what your score is can give you bargaining power when negotiating interest rates and terms.

For more information on your credit, how to improve it, or to see what kinds of loans you qualify for, call Pink Realty today at 719-393-7465 (Pink) and ask to speak to our lender. She will gladly help you. Once you are qualified for a loan, one of our experienced agents will help you find your perfect Colorado Springs homes!